Increasing production at Nigeria’s shallow-water assets

March 5, 2025

Ahonsi Unuigbe, founder and CEO of Petralon Energy, talks to The Energy Year about the company’s operations and main assets, how the increase in the oil price is impacting its operations and what needs to change to increase rig availability. Petralon Energy is an E&P company that acquires, develops, finances and operates oil and gas assets.

Can you give us an overview of Petralon Energy’s operations and its main assets?
Our main asset, awarded to us in 2021 with 100% interest, is a swamp asset with a water depth of around 4 metres in the Dawes Island field in the Eastern Niger Delta. By the end of Q2 2025, we plan to include a new well producing around 2,000 bopd, in addition to our existing well, which has produced around 400 bopd. We have the rig contract executed and funding for the operations in place. Furthermore, by the end of Q3 2025, we are targeting a potential third well.
We have a five-well field development programme for the Dawes Island field which we’ll be implementing over the coming years. The initial plan is to focus on the first three wells to get us to at least 4,300 bopd, which is a conservative estimate, and stabilise production. The objective is to go from 400 bopd to 2,300 bopd by June 2025 and then to 4,300 bopd within the ensuing six months.
Our other plan is to expand our business through additional acquisitions. For context, Petralon Energy indirectly holds a 6.06% share in Prime Oil & Gas, which has an 8% interest in PML [Petroleum Mining Licence] 52, formerly OML [Oil Mining Licence] 127, and a 16% interest in PMLs 2, 3 and 4 and PPL [Petroleum Prospecting Licence] 261, all of which were formerly part of OML 130.
Because of our interest in these offshore assets, the safest strategy from a capital-allocation perspective was to invest in a group that already had deep-offshore production, especially one with world-class operators, such as Chevron and TotalEnergies. This strategy allowed us to benefit immediately from producing assets, which lean on the strong operational capacity of the IOCs.
We intend to continue with similar investments while also paying close attention to the divestment trend by IOCs across sub-Saharan Africa, as we look to close in on an IOC divestment and acquisition.

How is the recent increase in oil prices impacting your operations?
The current market scenario has impacted our plans for local investment and expansion. For context, all licences awarded in the local 2020-2021 bid round required the execution of a minimum work programme, with commitments ranging from USD 20 million to USD 50 million within a defined timeframe, commencing upon the payment of the signing bonus. You had to prove your position and financial muscle to take on the assets awarded in the bidding round.
When oil prices are low, there’s not much appetite to risk drilling for oil. When oil prices increase to USD 75-80, then you start to get good returns if you’re producing. As a result of the current oil price, there is a huge demand for drilling rigs, particularly among all the new licence holders. This scenario has to some extent affected our business objectives. However, we anticipated this.
We have been fortunate in that we planned ahead and signed a contract and made financial commitments to secure a suitable swamp rig, together with the funding to commence drilling a well this year. This puts us in a strong position to consider drilling an additional well within the year, following the completion of the initial well and the receipt of sufficient data from the initial campaign.
On the other hand, if you talk to many indigenous asset owners, they will tell you that they are still searching for rigs, as rig availability is an issue, particularly for swamp rigs.

 

What changes are needed to ensure greater rig availability?
On the side of regulators, there should be increased focus on facilitating the provision of oilfield services. Petralon, like other upstream companies, is in the business of exploration and production, not in the business of providing drilling services. However, the lack of availability of drilling rigs has forced us to investigate those services to ensure we can meet our business objectives.
The regulators should work with the indigenous producers to create incentives that allow them to procure rigs and stock other long-lead items (such as well heads and completion jewelleries) which are necessary for oil production.
There is also some work to be done on the financing side. The oilfield services providers have limited assets due to a lack of financing available for acquiring more drilling rigs, and these oilfield services providers usually do not have the capacity to access financing on their own. However, if the regulator steps in and works with financial institutions to formulate policies that facilitate financing, we could see a positive outcome.

Can you walk us through your strategy for the recent 2024 bidding rounds?
The oil blocks for the 2024 bidding rounds were, in our opinion, largely exploratory in nature. That means that you must drill appraisal wells and spend a lot of money procuring seismic data and proving the reserves before you go into production.
Part of our strategy at Petralon Energy is that we do not get involved in anything that won’t produce in the near term. Consequently, we currently do not have the appetite for such blocks. They do not match the stage we are at in our strategy.
When it comes to acquiring new blocks, our strategy remains the same as in the previous bidding rounds. We are focusing on shallow-water blocks. We have doubled down on our strategy by becoming more specific about the types of assets we want in the shallow-water and swamp space. For example, the Dawes Island field aligns with our strategy of acquiring swamp assets.

How are you working towards making your operations more sustainable?
As part of our 2030 strategy, we have put in place an energy transition plan. With our production on Dawes Island, we should produce around 3-4 mcf [84,900-113,200 cubic metres] per day of gas. It’s not a large quantity of gas, but we plan to use that gas to power the asset and the neighbouring community. We’re already looking to set up partnerships to accomplish this project. It is a part of our immediate plan to form partnerships for gas-to-power projects.
When it comes to our operations, some of the gas will be used for gas lifting the wells in the future to optimise well recovery. The gas therefore helps us improve operational efficiency through the gas lift and helps us reduce operational costs through monetising the byproduct of our activities.
Most importantly, the monetisation of gas has a positive environmental impact and also empowers the local community. We seek sustainable partnerships in everything we do. It is something that has been core to our values since the day I founded the company.

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